A detailed mechanistic study of Co(III)-catalyzed C4-alkenylation of 3-acetylindole (1a) was done based on calculations at density functional theory (DFT) and correlated wave function levels. The whole catalytic cycle consists of four steps: C-H activation, olefin insertion, β-hydride elimination, and regeneration of the catalyst. The theoretical results support olefin insertion as the rate-determining step leading to the experimentally observed regioselectivity of the C4 site over the C2 site. By the analysis of three-dimensional (3D) geometries and the NCl plot, the preference for the C4 site over the C2 site could be attributed to the weaker repulsive interaction between the indole moiety and olefin in the transition states of the olefin insertion step for the former. The reliability of the theoretical mechanistic results is further confirmed through the DFT calculation of other related indole derivatives and olefin substrates.